2014 (10) TMI 387 - AT - Service Tax

Waiver of pre deposit - Delay in filing of returns - Imposition of penalty - Held that - Rule 7C read with first proviso makes it abundantly clear that the maximum penalty that can be imposed under the said Rule is the one prescribed under Section 70. During the impugned period i.e. April 2008 to March 2011 the maximum penalty that could be imposed under Section 70 was ₹ 2000/-. Therefore, in respect of six returns, the maximum penalty that could have been imposed was only ₹ 12,000/- and not more than that amount. Therefore, prima facie I am of the view that the late fee of ₹ 1,01,500/- imposed is not sustainable in law. Inasmuch as the appellant has already paid a penalty of ₹ 10,000/- under Section 77, the same is sufficient for hearing of the appeal - stay granted.

Summary

Issues:
Penalty for delayed filing of service tax returns under Rule 7C of the Service Tax Rules, 1994.

Analysis:
The appeal was against the Order-in-Appeal confirming a penalty of &8377; 1,01,500/- on the appellant for delayed filing of service tax returns. The appellant argued that they were under the impression they were not required to file returns due to exporting services and no payment for domestic services. The department issued notices for non-filing of returns and imposed penalties. The appellant contended that the penalty imposed exceeded the cap specified in Section 70 of the Act. The appellant had already paid a penalty of &8377; 10,000/- under Section 77. The Revenue argued that the maximum penalty under Rule 7C was &8377; 20,000/- per return. The Tribunal analyzed Rule 7C and Section 70, noting that during the relevant period, the maximum penalty under Section 70 was &8377; 2,000/- per return, totaling &8377; 12,000/- for six returns. Therefore, the Tribunal found the late fee of &8377; 1,01,500/- imposed was not sustainable in law. The Tribunal granted waiver from pre-deposit of the dues adjudged against the appellant and stayed recovery during the appeal's pendency.